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ALS 2008 Agency

ALS 2008 Agency

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Published by Eman Santos
Ateneo Law School Agency 2008
Ateneo Law School Agency 2008

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Published by: Eman Santos on Jun 29, 2010
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Civil Law Summer Reviewer
 
A
TENEO
C
ENTRAL
B
AR 
O
PERATIONS
 
2008
LAW ON AGENCY
CHAPTER 1: NATURE, FORM AND KINDS OFAGENCYCONTRACT OF AGENCY
is a contract whereby aperson binds himself to render some service or todo something in
representation
or
on behalf of another 
, with the consent or authority of the latter.(
Art. 1868
)
Characteristics:
1.Consensual2.Nominate3.Preparatory4.Principal5.Unilateral;Bilateral (if agency is for compensation)
Nature:
Since it is a contract there must be ameeting of the minds as to consent, object, andcause.
Exception to contractual nature:
-
When the agency is created
by operationof law 
Ex: Agency by Estoppel 
Basis:
Representation
The acts of the agent on behalf of the principalwithin the scope of his authority produce the samelegal and binding effects as if they were personallydone by the principal.
Hence, the distinguishing features of agency areits
representative character 
& its
derivativeauthority.
Purpose:
Extend the personality of the principalthrough the facility of the agent
Capacity of the Parties:1.Principal
a.He may be a natural or a juridicalpersonb.He must be capacitated. The rule is if aperson is capacitated to act for himself or his own right, he can act through anagent.-The agent is not liable where he wasignorant of the principal’s incapacity
2.Agent
a.Insofar as the third persons areconcerned, it is enough that theprincipal is capacitated.b.Insofar as his obligations to hisprincipal are concerned, the agent mustbe able to bind himself.
c.
But as an agent, some mentalcapacity is necessary, so, those who areabsolutely incapacitated (
ex. Insane persons
) cannot be agents.
ESSENTIAL ELEMENTS
1.
Consent
 
of the parties to establish therelationship;
2.
Object of the contract is the
execution of a juridical act
in relation to third persons;
3.
Agent acts as a
representative
and not forhimself; and
4.
Agent acts
within the scope of hisauthority
.
Orient Air Services v. CA
G.R. No. 76931, May 
 
29, 1991 An illegal termination of agency does not justify reinstatement of the agent as such. The agenccannot be compelled by the courts to be reinstated because such relationship can only be effected withthe consent of the p
 
rincipal.
Acts That Cannot Be Done By Agent:
Personal Acts –
ex. Making of a will 
Criminal or Illegal Acts
Nature of Relationship between Principal andAgent:
-
Fiduciary
 
based on trust confidence1.Agent is estopped from asserting interestadverse to his principal2.Agent must not act as an adverse party3.Agent must not act for an adverse party4.Agent must not use or disclose secretinformation5.Agent must give notice of material facts
GR:
Knowledge of the agent is imputed to theprincipal even though the agent nevercommunicated it to his principal
Exceptions:
a.Where the interests of the agent areadverse to those of the principal;b.Where the person claiming the benefitof the rule colludes with the agent todefraud the principal.
DISTINCTION BETWEEN AGENCY & LEASE OFSERVICEAGENCYLEASE OF SERVICE
RepresentationEmploymentAgent exercises
discretionary powers
Lessor ordinarilyperforms only
ministerial functions
3 persons are involved:principal, agent and the3
rd
person with whomthe agent contracts2 persons are involved:lessor and lessee
Page 1 of 297
 
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Civil Law Summer Reviewer
 
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2008
Relates to
commercialor businesstransactions
Relates more to thematters of mere
manual or mechanicalexecutionDISTINCTION BETWEEN AGENCY & GUARDIANSHIPAGENCYGUARDIANSHIP
Agent represents a
capacitated
personA guardian representsan
incapacitated
person.Agent is
appointed bythe principal
and canbe removed by thelatter.Guardian is
appointedby the court
andstands in
loco parentis
.Agent is subject to thedirections of theprincipal.Guardian is not subjectto the directions of theward but must act forthe benefit of the latterAgent can make theprincipal personallyliable.Guardian has no powerto impose personalliability on the ward.
DISTINCTION BETWEEN AGENCY & LEASE OFPROPERTYAGENCYLEASE OF PROPERTY
Agent is controlled bythe principal.Lessee is not controlledby the lessor.Agency may involvethings other thanproperty.Lease of propertyinvolves property.Agent can bind theprincipal.Lessee cannot bind thelessor.
DISTINCTION BETWEEN AGENCY TO SELL SALEAGENCY TO SELLSALE
Agent receives thegoods as the principal’sgoodsBuyer receives thegoods as ownerAgent delivers theproceeds of the saleBuyer pays the priceAgent can return theobject in case he isunable to sell the sameto a third personBuyer, as a general rule,cannot return the objectsoldAgent in dealing withthe thing received isbound to act accordingto the instructions of hisprincipalBuyer can deal with thething as he pleases,being the owner
DISTINCTION BETWEEN AGENT CONTRACTOR AGENTINDEPENDENTCONTRACTOR 
Represents his principalEmployed by theemployerActs under theprincipal’s control andinstructionActs according to hisown methodPrincipal is liable fortorts committed by theagent within the scopeof his authorityEmployer not liable fortorts committed by theindependent contractor.
DISTINCTION BETWEEN AGENCY ANDPARTNERSHIPAGENCYPARTNERSHIP
An agent must submit tothe principal’s right tocontrolA co-partner is notsubject to co-partner’sright to control, unlessthere is an agreement tothat effectThe agent assumes nopersonal liability wherehe acts within the scopeof his authorityThe partner binds notonly the firm membersbut himself as wellThe agent takes hisagreed share of profitsnot as owner but as anagreed measure of compensation for hisservicesThe profits belong to allthe partners as commonproprietors in agreedproportions
Art. 1869.
 
 Agency may be express, or impliefrom the acts of the principal, from his silence or lack of action, or his failure to repudiate theagency, knowing that another person is acting onhis behalf without authority. Agency may be oral, unless the law requires aspecific form.
Classifications of Agency1.As to manner of creation
a.
Express
– agent has been actuallyauthorized by the principal, eitherorally or in writing
b.
Implied
– agency is implied fromthe acts of the principal, from hissilence or lack of action or hisfailure to repudiate the agencyknowing that another person isacting on his behalf withoutauthority, or from the acts of theagent which carry out the agency,or from his silence or inactionaccording to the circumstances
2.As to character
a.
Gratuitous
agent receives nocompensation for his services
b.
Onerous
agent receivescompensation for his services
3.As to extent of business of the principal
Page 2 of 297
 
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2008
a.
General
– agency comprises all thebusiness of the principal
b.
Special
– agency comprises one ormore specific transactions
4.As to authority conferred
a.
Couched in general terms
agency is created in general termsand is deemed to comprise onlyacts in the name and representationof the principal.
b.
Simple or Commission
agentacts in his own name but for theaccount of the principal.
Forms of Agency:GR 
: Appointment of an agent may be oral orwritten; no formal requirements
Exception
: When the law requires a specific form(
ex.
 
agent’s sale of real property or any interest therein)
Art. 1875.
 
 Agency is presumed to be for acompensation, unless there is proof to the contrary.
The agent does not have to prove that theagency is for compensation.
But, the
 prima facie
presumption that theagency is for a compensation may becontradicted by contrary evidence
Broker
-
negotiate contracts relative to property inbehalf of others and for a compensation/fee
When Broker Entitled to Compensation:
 
Whenever he brings to his principal aparty who is able and willing to take theproperty, and enter into a valid contract uponthe terms named by the principal, althoughthe particulars may be arranged and thematter negotiated and completed between theprincipal and the purchaser directly
However, a broker is never entitled tocommission for unsuccessful efforts.
Manotoc Brothers, Inc. v. CA
221 SCRA 224
 
(1993)The broker should be paid his commission where heis the
efficient procuring cause
in bringing thesale.
Efficient procuring cause:
when there is a close proximate and causal connection between theefforts and labor of the agent and the principal’ssale of property.
LAW ON DOUBLE AGENCY
Disapproved by law for being againstpublic policy and sound morality
EXCEPT 
where the agent acted with full knowledge andconsent of the principals
Right of agent to compensation in case of double agency:
1.
With knowledge of both principals
-recovery can be had from both principals
2.
Without the knowledge of bothprincipals
- the agent can recover fromneither
3.
With knowledge of one principal
- as tothe principal who knew of that fact and asto the agent, they are in
 pari delicto
andthe courts shall leave them as they were,the contract between them being void asagainst public policy and good morals
Art. 1870.
 
 Acceptance by the agent may also beexpress, or implied from his acts which carry out the agency, or from his silence or inactionaccording to the circumstances.
Art. 1871
.
Between persons who are present, theacceptance of the agency may also be implied if the principal delivers his power of attorney to the agent and the latter receives it without any objection.
Art. 1872.
 
Between persons who are absent, theacceptance of the agency cannot be implied fromthe silence of the agent, except:1.When the principal transmits his power of attorney to the agent, who receives it without any objection;
2.
When the principal entrusts to him by letter or telegram a power of attorney withrespect to the business in which he ishabitually engaged as an agent, and he did not reply to
 
the letter or telegram.
Forms of Acceptance by Agent:
1.
Express
- when it is oral or written
2.
Implied
-when it can be inferred from theacts of the agent which carry out theagency, or from his silence of inactionaccording to the circumstances
a.
Between persons who arepresent
– implied acceptance if theprincipal delivers his power of attorney to the agent and the latterreceives it without any objection
b.
Between persons who areabsent
acceptance not deemedimplied from the silence of theagent.
Exceptions
:i.When the principal transmits hispower of attorney to the agent
Page 3 of 297

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